PAGE Courts, Rules of Courts of First Instance... Supreme Court of the Philippine Islands.. Damages, Liquidated... Dance, Annual Law.. Day, University... Divorce, An Act Establishing (Act No. 2710). Events, College of Law.. Exercises, Opening... Filipino Attorneys may Practice in the United States Court for China.... Fisher, Justice F. Forum, Law..... Gallego, Manuel... Gerkin, Chester J. Hamilton, Peter T.. Joya, Acting Dean M. de Junior Philippine Senate.. Juniors.. Kincaid, Judge W. A. Law Courts in China.. Law Dance, Annual.. Law Forum.. Laws: 227 227 111 176 207 249-277; 287-304 28 26 20 127 .98, 135, 207 1 99 128 285 136 284 197 62 176 .98, 135, 207 A Comparative Study of Penalty under the Civil Law and Liquidated 111 A Comparative Study of the Stages in the Life of a Contract under the 137 A Critical Study of the Usury Law... 1 Legal Clinic.... Legal Obligations Arising Out of Treaty Relations Between China and other 69, 97 Liquidated Damages and Penalty under the Common Law, Etc. Lobingier, C. S. Meetings: The Barristers' Open Meeting. . . . Open Meeting of the Junior Philippine Senate.. Open Meeting of the Philippine Barristers.. Min-Ch'ien T. Z. Tyau.... 87 111 111 26 284 136 135 87 Napoleon and His Code.... Organizations..... Oratorical Contest.. Penalty Under the Civil Law, Etc. Philippine Bar Association, Convention of the.. Present War Legislation and Jurisprudence of the United States, The. PAGE 305 27 208 111 240 99 27 247 Red Cross Tea-Dansant.. Rizal Day..... Rules of Courts: Courts of First Instance... 227 Supreme Court of the Philippine Islands... 227 Rules for Examination of Candidates for Admission to the Practice of Law.. 168 Seniors...... 247 Student Council, The.. .26, 68, 97, 135, 175, 207, 247, 284 Supreme Court of the Philippine Islands, Rules of the.. 227 Treaty Relations Between China and Other Countries, Legal Obligations PHILIPPINE LAW Vol. V AUGUST, 1918 No. 1 A CRITICAL STUDY OF THE USURY LAW (ACT 2655) BY MANUEL V. GALLEGO, B.A., LL. B. (Awarded the Lawyers Co-operative Publishing Co. prize of United States Supreme Court Digest, Extra Annotated, 7 volumes, for the best thesis presented for Graduation from the College of Law, University of the Philippines.) PREFATORY NOTE About a year ago when the writer of this monograph first thought of making a critical study of the Usury Law, he was entirely unaware of the hard task that he would have before him. The all-powerful influence of the Usury Law on our economic life, as well as the increasing attention devoted to it by our government officials day by day, confirm the author's belief that the limited time at his command coupled with his still more limited knowledge and experience will make it impossible for him to do justice to the magnitude of the subject and the exigencies of existing conditions. The fact that there has not been published so far an analytic study of a law of this kind in the Philippines prompted the writing of this thesis. The author has several objects in view:-First of all, it is his intention to show the rôle which a law of this kind has been playing from the dawn of legal history up to the present time. Second, to give the reader a view of the subject more comprehensive than that which could be gathered from a mere reading of the provisions of the law itself, by citing the opinion of the most important authorities on the subject in the plainest words and in a most convenient manner. Third, to express the varied means known to the author by which the provisions of the law are evaded. And, last, but not least, to help untie the Gordian-knot which oppresses the poor in their dealings with the wealthy class, by proposing a remedy which may help to bring about the total suppression of usury. The materials found in this work are a conglomeration of the existing law on the subject, of the miscellaneous provisions regarding interest found in the Civil Code and the Code of Commerce, of the decisions of our Supreme Court and of the opinion of American authorities on the matter fortified by leading cases, and added to all these, as a supplement, is the humble opinion of the author himself. PART I CHAPTER I HISTORY Antiquity. The writer is of the opinion that at least a very brief history of the law on the subject is necessary in order to trace from the past the roots of the present ideas about usury. It should be understood that in early times, there was no distinction between "interest" and "usury." The taking of interest was considered usury; it was looked upon with great disfavor, regarded with abhorrence, and severely punished. The church uttered its anathema against those who took interest, whether great or small, in amount. Such kind of usury was prohibited by the primitive laws of the Chinese, the Hindus, and also by the Koran. The Mosaic Laws forbade the Jews from exacting interest upon loans to brethren but permitted it as to loans made to aliens. Moses said: "Thou shalt not lend upon usury to thy brethren; usury of money, of victuals, usury of anything lent upon usury. Unto a stranger, thou mayest lend upon usury, but unto thy brother, thou shalt not lend upon usury." The Athenians allowed moderate charges of interest; custom fixing the maximum rate of 12%. The Romans were also allowed to take reasonable rate of interest, the current rate being about 84%. During those early times, it was difficult to find profitable investments for money, so the lending thereof was considered an act of charity. However, in the course of time, the idea that "money is barren" passed away and the increasing profit that may be derived from the use of money gradually gave rise to the universal belief that the taking of a reasonable rate of interest is justifiable before the law and consistent with the precepts of morality. In Spain. Very little is known about the usury law of Spain. It seems that the Spanish Legislature paid a little attention to this question. It is known, however, that on or about the middle of the 13th century, king Alfonso X allowed interest as high as 25% to be charged in Castile; while in Aragon, the rate was lower, being 20% at first and later 12%. Webb, a famous commentator on the law of usury, classifies the Spanish Law on the subject into two kinds: legal rate which is applicable to contracts in case the parties have not agreed upon a fixed rate, and the conventional or customary rate which is the one sanctioned by custom in a given place at a given time. It is to be noted that the same classification may be applied to our present usury law. In Spain, as in England, all restrictions upon interest charges were removed about 1850. The history of usury from 1850 will find its place under the next heading. In America. The underlying principles of the early colonial usury acts of the United States were borrowed from England, which in turn borrowed hers from the |